Is Yahoo’s Mayer still ‘amazing’ or simply ‘failed’?

Opinion: At the CEO’s two-year anniversary, everyone wants to make a final judgment

By

MarekFuchs

Columnist

Getty Images

Yahoo CEO Marissa Mayer

Marriages may suffer from a seven-year itch, but for the media and the CEOs they lionize, the precise moment of reconsideration seems to come at two years.

That is why Yahoo’s
US:YHOO
second-quarter earnings report, expected after the close of trading today, a day short of the two-year anniversary of Marissa Mayer’s heralded appointment, is shaping up as the consummate pivot point.

You can already see the media seizing the two-year anniversary as the appropriate moment to take the first cold, hard look at Mayer’s tenure, which has produced a lot of excitement, but only middling results.

Asked National Public Radio about Mayer, recently mocked for snoozing through a meeting: “So two years in, how’s she doing?”

That marker — two years — has all but become a prefix to Mayer’s name. In an earnings preview, Yahoo itself wrote: “It’s been two years since Marissa Mayer became CEO at Yahoo …”

While Yahoo has been “a Wall Street darling,” Mayer has not made the company’s products “more popular.” This sudden turn toward revisionism is also apparent in a Fortune lead: “At first blush, Marissa Mayer’s nearly two-year tenure at Yahoo seems golden. …” But after two years, there is always a second blush.

Noting the two-year anniversary of her appointment, The Wall Street Journal did not even blush, writing: “The clock is now ticking for Marissa Mayer.”

This is quite a change from the celebratory narrative we saw from the time of Mayer’s appointment until the two-year anniversary was in sight — and will probably influence traders. They have been kind to Yahoo’s stock in Mayer’s tenure — no surprise, until fairly recently. The recent lurch in the Mayer story line, though, will push them to cast an especially critical eye at today’s earnings.

How far Mayer has suddenly fallen in the court of public opinion. Mayer was originally the source of genuflecting as someone who “blazed trails” as both a woman engineer and ”serious technologist who was also willing to show her feminine side.” As a pregnant CEO, she was a corporate leader and cultural touchstone, all rolled up into one woman from Wausau, Wisc.

Much of the original level of praise was deserved, but then the media’s hyperbole machine kicked in. Vogue ran a story called “Hail to the Chief” with a sultry photo spread.

Back then, Fortune, recently seen blushing, used the words “unprecedented” and “amazing” to capture Mayer in a headline and soon declared Mayer “the first CEO in a parade of bosses to produce a turnaround strategy that appears to be working.” This, mind you, was just over a year after her appointment. Never mind Rome not being built in a day, it took well over a year for Steve Jobs, technology genius without parallel, to turn around Apple
AAPL, +1.84%

But such is life in the fast lane of shifting story lines. The media tells one story with total assuredness, then tells the complete opposite with the same degree of assuredness.

Overreaction is their default mode. To avoid falling for the next leg of it, here’s what we know for certain:

Mayer had a grace period to make acquisitions — including the $1.1 billion Tumblr deal — and to hire big-name media creatures like Katie Couric and David Pogue. Now, though, at the two-year mark, the media and traders will legitimately want something more than middling results to show for it.

That’s why Yahoo has to hit the expected 30 cents a share in earnings, according to Zacks, or $1.08 billion in revenue, already a head-over-heels 5% tumble.

The signs are not great. The company’s market capitalization is at a robust $35 billion, but that’s mostly thanks to cash from Alibaba, the Chinese Internet outfit that has nothing to do with Yahoo’s ongoing operations, as well as excitement over share buybacks and acquisitions. Site traffic is terrible and search has yet to gather its footing. The shares, robust since Mayer’s appointment, are down about 12% this year.

Even if the media pile on Mayer, though, remember that your confidence in her should not completely curdle. The CEO of a technology company in need of a turnaround should probably have a bit more leeway than the incoming CEO of an established company that merely needs a manager — like, say, Clorox
CLX, +0.40%
(CLX) — not a visionary.

In fact, if there isn’t a tangible sign of progress in Tuesday’s report, journalists and traders will recoil. But they may recoil too much — and therein might lie opportunity. The overreaction, after all, has already begun. Gawker, a media site, interpreted Yahoo’s decision against building more office space as a sign that the end was near: “Yahoo Gives Up Hope,” said the headline to an article that called Mayer’s turnaround “failed.”

This is the same Gawker that, at the time of her appointment, called Mayer “glamorous.” Now she passes on constructing a few new parking spots and is called “failed.”

Look: The two-year mark is a time when the story line on rock star CEOs tends to change. But just as the original story lines are too florid, the revised story lines can be too harsh. Be aware of the shifting tone and tenor of the jabbering, but don’t get caught up in any of it. Just keep your eyes on the numbers, which — over time — do not lie.

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